Venturesome Capital- State Charter School Finance Systems

69 venturesome capital state charter school finance

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Unformatted text preview: s Facilities for charter schools represent new costs in all but the fastest growing states, where new schools would have needed to be built anyway. States enacted the first charter school laws in the early 1990s during an economic recession. Viewed as a no-cost reform, operating funds followed students from school districts to charter schools. New facilities complicated the cost neutrality, especially if vacant space existed in school districts. There also may have been expectations that charter schools had an obligation to bring private sector resources with them, especially facilities. The ability to procure facilities was seen in part as an acid test of an individual charter school’s viability. Today, with state coffers full, the “no cost” approach to charter schools now proves less compelling, and legislative action in many states seeks to provide more capital financing for charter schools; some states in fact provide charter schools with substantial capital funds. Capital Spending in School Districts As a rule of thumb, school districts devote about 10 percent of education spending to debt retirement and capital outlay for equipment and renovation. In fast-growing states and school districts, capital expenditures usually exceed this level, and in low-growth states and mature cities, capital spending consumes a smaller share of the budget. The fiscal health of a community or state also determines spending on capital facilities. States and school districts often allocate general operating funds to equipment and renovation during periods of revenue growth. Similarly, capital expenditures fall to the budget axe during periods of fiscal decline. The variation in facilities funding over time, among states, and among school districts within states makes it difficult to determine what comparable capital financing for charter schools would look like. In 1997-98, Connecticut spent about $550 per student on debt retirement or about 8 percent of total spending. In Massachusetts, state and local spending on capital averaged $750, about 9 percent of total spending. Minnesota calculates school district average spending on debt retirement as $465, or roughly 7 percent of total spending. In Pennsylvania, debt service consumes about 8 percent of total spending, with another 1.1 percent devoted to capital outlay. On the other hand, a fast growing state like Florida devoted about 14 percent of total spending to facilities construction in 1997-98. Across the country in 199697, the average school district spent 6.2 percent of revenue on long-term debt. (Protheroe, 1997).34 These state averages, however, belie great variation between school districts. In 1997-98, according to the KPMG−Peat Marwick (1998) study of charter school tuition, debt retirement spending per pupil in five large Massachusetts school districts varied considerably: Boston,$184; Fall River, $115; Lawrence, $520; Springfield, $573; and Worcester, $353. A study of eight school districts in Pennsylvania f...
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This note was uploaded on 02/11/2013 for the course ECON 101 taught by Professor Smith during the Spring '09 term at Harvard.

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